Lush Australia admits underpaying employees by $2M

Lust Australia has reported itself to the Fair Work Ombudsman for underpaying staff by $2 million. The cosmetics company announced on Tuesday that it has discovered a “significant” payroll error in its accounts that meant more than 5,000 employees had been underpaid since 2010.

Peta Granger, the company’s national director, told reporters in Sydney that they had established a “national payback scheme” to give their employees their due, making sure they “paid back every cent owed, with interest.” Some of the employees, she said, were owed between $5,000 and $10,000, while some “won’t be owed anything.”

The error was a result of failing to update the company’s payroll infrastructure, dating back to 2010 during the introduction of the modern awards system. The modern awards system sets out the minimum terms and conditions of employment on top of the National Employment Standards. This came into effect on Jan. 1, 2010.

“What has become alarmingly clear to us is that our internal payroll systems have not kept pace with our growth,” she said. “It was irresponsible to imagine that such a manual and outdated system could work for a business of our size.

“We are sincerely sorry for letting our staff down so badly. We hope that they can forgive us for this monumental mistake.”

She said they first became aware of the error in August last year. Since then, they had established an internal investigation and pledged to invest additional $1.5 million to establish a customised system allowing about 200,000 historic timesheet to be re-entered.

Granger described it a “horrifying moment, completely mortifying.” She continued, “We would never intentionally underpay our staff. We are devastated to have gotten things so wrong.”

As to why it took the company eight years before the error was identified, Lush people support manager Amy Lyons explained that it was due to their lack of oversight. “A lot of the time, our staff would raise their individual payroll concerns with their direct manager, so no one had the oversight to be able to look at the end-to-end process and spot a pattern,” she said.

Affected employees will have to wait until December to receive back payments, which will include interest.